British watchdog expresses concerns over growing partnerships between the big 5 and AI startups

The UK's competition watchdog is paying close attention to the AI industry and has expressed its concern over the growing trend of the Big 5 cloud providers teaming up with AI startups. At a recent event, Sarah Cardell, CEO of the UK Competition and Markets Authority (CMA), said they're concerned about how these partnerships could hurt competition.

"I think it’s fair to say that when we started this work, we were curious," said Cardell. "Now, with a deeper understanding and watching developments very closely, we have real concerns."

The CMA started looking into this after releasing a report last September about AI foundation models, which are like the building blocks for AI services. The report proposed a set of principles for AI model vendors, to ensure accountability, access, diversity, choice, and so on.

However, the competition watchdog has developed real concern, particularly with the way the big 5 tech companies popularly known as GAMMA (Google, Amazon, Microsoft, Meta, and Apple) are teaming up. These companies have a lot of power because they have access to big data and control how AI tools are used. The CMA is concerned this could make it hard for smaller companies to compete.

"These firms often have strong positions in critical inputs for FM development – such as large data sets or AI compute infrastructure at significant scale – and/or key access points or routes to market for FM release and deployment," the CMA said in an update paper detailing its reasoning.

"We are therefore concerned that the largest incumbent technology firms could profoundly shape the development of FM-related markets to the detriment of fair, open, and effective competition and ultimately harm businesses and consumers."

The CMA is already investigating some partnerships, like Microsoft's deal with OpenAI and how big tech companies provide cloud services. This shows they're taking these concerns seriously and could lead to new rules to make sure the AI industry stays fair.

Meanwhile, officials from the US and Europe are also talking about how to keep AI fair and competitive, calling for collaboration between countries to deal with the challenges AI brings.

"The fast-moving technology sector raises global challenges such as regarding artificial intelligence and cloud computing more broadly," European Commission executive vice president Margrethe Vestager said during the fourth US-EU Joint Technology Competition Policy Dialogue. "It is essential to anticipate and address such challenges through close cooperation, leveraging our respective experiences for the benefit of consumers and businesses on both sides of the Atlantic."

Funny enough, the big companies are already anticipating legal complications from their involvement in AI companies and will, therefore, be prepared legally and financially to counter any challenges that arise.

"Our implementation of AI systems could result in legal liability, regulatory action, brand, reputational, or competitive harm, or other adverse impacts," Microsoft said in its 10-Q filing in January.

"These risks may arise from current copyright infringement and other claims related to AI training and output, new and proposed legislation and regulations, such as the European Union's AI Act and the US’s AI Executive Order, and new applications of data protection, privacy, intellectual property, and other laws."